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TMI Blog2015 (11) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... is not based on the correct appreciation of the law as well as facts and therefore, we hold that the loans/ advances given by the company to the assessee during the year under consideration till the date of sale of shares by the assessee, should only be considered for deemed dividend. Accordingly, we remit the matter back to the file of the AO and direct the AO to compute the loan/ advances given by the company till the date of sale of shares by the assessee as deemed dividend, subject the availability of accumulated profit of the company.- Decided in favour of assessee for statistical purposes. Addition against low house withdrawals - Held that:- The wife of the assessee as well as his father also contributed towards the household expenses, which increases the house hold withdrawal to ₹ 3,63,000/-. In our opinion, looking the family size of the assessee and living standard, the house hold withdrawals are sufficient and therefore addition made by the AO is deleted - Decided in favour of assessee. - ITA No.4945/Del./2011 - - - Dated:- 30-9-2015 - Sh. A. T. Varkey, JM AND Sh. O.P.Kant, AM For The Appellant : Sh.Rajeev Sachdeva, CA For The Respondent : Sh. P. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On further detailed perusal of the ledger account of the company, the ld AO found that the assessee had given loan to the company, of which outstanding amount at the beginning of the year i.e. 01-04-2007, was of ₹ 20,47,411/-, however, the whole of this loan was received back by the assessee in May, 2007. Thereafter, the assessee received loan/advances from the company from June, 2007 upto 24.09.2007. However, the assessee sold the shares of the company owned by him and also resigned from the post of director during the concerned previous year i.e. 2007-08. As the ld AO noticed the fact of assessee being beneficial owner of more than 10 % shares having voting power, so he was of view that the whole loan/ advance received from the company was liable for the deemed dividend in the hands of the assessee as per provisions of section 2(22)(e) of the Act. The assessee submitted that he resigned from the post of director as also sold shares during the concerned financial year i.e. 2007-08, therefore, he was not liable for deemed dividend. Alternatively ,the assessee claimed that in case he was liable for the deemed dividend , then same should be only the amount of loan/advances rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. As regards to the house hold withdrawals , the ld. AR submitted in his submission that wife and father of the assessee have also contributed to the family expenses and if same is taken into account, the house hold expenses of the assessee are sufficient to explain the expenses of family of the assessee. On the other hand, the learned senior department representative (in short ld. SR. DR‟) relied on the order of the lower authorities. 5. We have heard the rival submission and perused the material on records. In ground Nos. 1 and 2 , the assessee has challenged addition of deemed dividend. From the provisions of section 2(22)(e) of the Act , it can be derived that in order to examine whether the advance received by the assessee from the company is liable for treating as deemed dividends in the hands of the assessee, the following three conditions must be fulfilled: 1. Whether M/s. CASCO Electronics Pvt. Ltd. (CEPL) was not a company in which public was not substantially interested? 2. Whether, the assessee was a beneficial owner of shares ( other than shares entitled to fixed rate of dividend) holding not less than 10% of the voting power 3. Whether the company i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT Vs. HK Mittal (1996) 219 ITR 420 has held that the chief ingredient is that one should be a share holder on the date the loan is advanced to the him and where such ingredient is not established, the advance could not be taken as deemed dividend under section 2(22)(e) of the Act. The ld. AR in his submission relied on judgement of the Hon‟ble Kerala High Court in the case of Commissioner of Income-tax Vs. Smt S Parvathavarthini Ammal (supra) wherein it is held that: 16. It is already settled that an application for transfer can be initiated either by the transferor or by the transferee. The question is as to what are the requirements of the provisions of the Companies Act in regard thereto. Learned counsel for the assessee referred us to the provisions of s. 108 of the Companies Act specifying that the transfer of shares is not to be registered except on production of instrument of transfer. The said statutory provision prohibits the company from registering a transfer of shares, unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee as per the particulars stated therein. On facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any loan or a advance received thereafter will not qualify as deemed dividend. 11. Once, we have held that the advance received till the date of sale of shares are liable to be considered as deemed dividend , now the issue to be decided is, as to what was the date of sale of shares in the case of the assessee. As regards to the date of sale of shares, the ld. AR has filed written submission, the relevant part of which is reproduced as under: That as the appellant has given the transfer deed on 30-07-2007 in respect of ₹ 1,22,500/- equity shares in respect of sale of the said shares to Sarika Khanna which is evident from the share transfer deed as per Page No.19 of the paper book . Please note that the transfer deed dated 30/07/2007 was filed by the AR of the petitioner before the learned assessing authority during the course of assessment on 14.12.2010 by AR . (refer page no.20 to 28). That the petitioner was having unsecured loan from the company on 30-07-2007 was for ₹ 1,12,589/- as per Page No. 17 18 of the paper book. That as the equity shares of Casco Electronics Pvt. Ltd. were sold by the appellant on 30.07.2007, the appellant was having nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of ₹ 80,000/- to the household withdrawal already declared by the assessee. Before the ld CIT(A), the ld AR of the assessee pleaded that the assessee was having simple living and no marriage social ceremony were performed during the year and therefore withdrawals were justified. , however, the ld CIT(A) upheld the action of the AO. Before us the assessee has filed a written submission, the relevant part of which is reproduced as under:- 10. That the appellant was living with his parents at Haider Quili, Chandni Chowk, Delhi during the said assessment year. The ownership of the house was of his wife. The appellant was having two children of which the details are as under:- A. Son aged 14 years studying in 6th class. B. Daughter aged 9 years studying in 2nd class. 11. That the appellant had made cash withdrawals of ₹ 1,20,000/-during the said assessment year for house hold. Apart from withdrawals made towards telephone insurance, mediclaim and car loan installment, electricity bills etc directly debited in bank statement. 12. That the wife of the appellant, Mrs. Radhika Sharma, has made cash withdrawals of ₹ 75,000/- against tuition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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